One of the most important aspects of retirement is financial planning. You want to make sure that you’ll have enough income to maintain your current standard of living, as well as have some disposable income so you can do fun things, like travel.
The general rule of thumb for middle and high-income earners is to have a retirement income of at least 70% of their former household income. Keep that number in mind as you read on.
I suppose that my wife and I would be considered mid-level earners. We had been in our respective careers for many years and had worked our way up to management positions. I was a lieutenant with a sheriff’s office in Florida and Linda was a director for a children’s advocacy center that assisted with child abuse investigations.
After 25 years on the job, I was eligible to retire and I looked forward to having more free time to spend with Linda. The problem was that Linda wasn’t eligible to receive a retirement for many years to come and we determined that if she did stop working, we would only have about 33% of our former income.
That’s a long way from the 70% recommended target income. In fact, the amount barely left us enough to eat regularly after we paid our all monthly expenses — which included a sizable mortgage and car payment.
We were both still in our 40’s, so there was certainly no reason why we couldn’t keep working until we reached that target income percentage. I calculated that it should only take about another dozen years or so.
Another dozen years or so?!!! Oh, I don’t think so.
If You Can’t Win the Game You’re Playing, Find a New Game
For over 15 years, Mexico was our favorite vacation destination and we would go there as often as we could. We loved everything about the Riviera Maya and we would often talk about moving there someday.
We started thinking that maybe someday was now.
I started researching everything I could about living south of the border — especially the cost of living. On paper, it looked like we could make it work, but only if we could eliminate all of our debt in the U.S. and reduce our spending.
We decided to give it a try and we then sold, donated or discarded 99% of our belongings in the U.S. We didn’t even want the expense of having to rent a storage shed. That liquidation helped us get rid of our mortgage, car payments and credit card debt. We even had money left over.
We applied for and were granted resident visas at the Mexican Consulate, packed our belongings into four large suitcases, and flew to Cancun with the intention of trying it for a year.
So, How’s It Going?
Well, we’ve been in Mexico for almost five years now and we absolutely love it.
We ended up using the money we had left over from the sale of everything we previously owned to buy a condo in a gated resort community and a car. We now live 100% debt free for the first time in our adult lives.
The lack of debt combined with the low cost of living in Mexico, has made it easy for us to live very well here. We enjoy a higher quality of life than we did in the U.S. and we have plenty of disposable income to enjoy our retirement to the fullest.
If you would like to see a breakdown of our living expenses, check out Retired in Mexico: A Detailed Look at Our Expenses.
Those are the expenses from last year, but most of them haven’t changed much. I’ll be releasing some updated figures in another article sometime in the near future. As a carefree retiree, I really don’t want to commit myself to a specific date.
Let’s Wrap This Up
This article may make it sound like we moved to Mexico on a whim and we were just lucky it worked out, but that’s not the case at all.
We conducted countless hours of research and carefully developed a plan to increase our chances of success. We knew that success meant happiness and failure meant going back to the States to work another dozen years or so. How’s that for motivation?
If you’re planning on making a similar move, hopefully you’ll find some useful information on our site. Many of the articles were written specifically with you in mind.
Well, that’s enough blogging for today. Hasta luego.